Qualcomm May Change Royalty System

Qualcomm Inc. (QCOM) may change the way it recognizes royalties from its licensees, which would reduce fourth-quarter pre-tax income by $298 million, the company said on Friday.

Qualcomm, whose shares fell about 6 percent, said it is determining if it can accurately estimate royalty revenue (search). If reliable estimates cannot be made, it will change its accounting to recognize royalty revenue only as it is received.

The San Diego-based company also raised its earnings estimate for the fiscal fourth quarter ending Sept. 26, to a range of 28 cents to 30 cents a share from a previous forecast of 26 cents to 28 cents.

The updated forecast brings Qualcomm's view nearer to analysts' average estimate of 29 cents a share as compiled by Reuters Estimates.

Qualcomm forecast fourth-quarter revenue would increase 60 percent to 62 percent from a year ago and 4 percent to 5 percent from the third quarter. It previously forecast a 57 percent to 65 percent rise from last year and a 2 percent to 7 percent rise from the third quarter.

Shares of Qualcomm were down $2.40 to $38 in Nasdaq (search) trade